I’m not sure I agree. Firstly, I bet that people have laundered plenty of money using online poker, and failed to report taxes on a lot of it, too. (Although obviously there’s a difference in scale between a proposed new replacement currency and poker players’ chips, and Bitcoin’s anonymity makes it much easier.)
Secondly, what makes it much easier to evade taxes by failing to report Bitcoin payments than evade taxes by failing to report cash or check payments? Taxes work because enough companies and individuals pay them voluntarily that the cheaters can be cross-checked into oblivion. I don’t see why people would be more likely to cheat if they were transacting in Bitcoin instead of cash.
Consider also the USG’s attempts to enforce IP laws. Lots of sound and fury, but totally ineffective so far in actually curbing copyright infringement by individuals. And you know a lot of lobbyist money must be going towards trying to get those laws working. If people ever care about using Bitcoin as much as they care about downloading an album quickly and easily, then it seems to me that government is in trouble.
Taxes work because enough companies and individuals pay them voluntarily that the cheaters can be cross-checked into oblivion.
Taxes work because people like me—highly-paid middle-class employees—find them almost impossible to dodge. Everyone else is the fluff on the side—it’s PAYE (pay-as-you-earn, where taxes are withheld from your earnings) employees who are the backbone of government revenue. And, increasingly, sales taxes. In both cases, the pressure point is businesses, of which there are far fewer than there are citizens.
Secondly, what makes it much easier to evade taxes by failing to report Bitcoin payments than evade taxes by failing to report cash or check payments?
Really? OK, I will assume you’re serious and not joking. A check is drawn on a bank or savings and loan or such, and banks, etc, are heavily regulated and audited by government.
As for cash, the U.S. government makes it inconvenient to pay someone or be paid by someone in cash with “Know Your Customer” banking regulations. They try to make it so that the inconvenience and risk increases at least linearly with the amount of cash involved.
Copyright infringement and gambling do not have the potential to seriously reduce governmental revenue. Consequently, the most competent bureaucrats have not been assigned to controlling those things like they have or will be assigned to controlling Bitcoin.
The U.S. response to infringement has been conducted mostly by the legislature and the judical branch. It would be a lot more effective if the most competent parts of the executive branch, e.g., the Secret Service and the Treasury Department, made it a priority.
Disclaimer: I haven’t studied Bitcoin so these comments should be taken as my rationale for not making the effort to study it.
I was serious, but on reflection, I agree—it’s easy to audit checks, since they go through a bank. You may be right about how large a threat to taxation a strong Bitcoin would be.
They try to make it so that the inconvenience and risk increases at least linearly with the amount of cash involved.
Linearly? You don’t have to go up all that far on a linear scale before you reach 100% chance that you will be caught and receive the maximum punishment allowed by law!
I agree you cannot make risk linear with dollars. What I tried to say is that they try to make inconvenience linear with dollars, so that one shouldn’t generalize from the fact that one can take a few 1000 out of the bank in cash and put it in again a few months later without anything happening.
Well, even that’s not right, but I do not have time to be more articulate right now.
Secondly, what makes it much easier to evade taxes by failing to report Bitcoin payments than evade taxes by failing to report cash or check payments? Taxes work because enough companies and individuals pay them voluntarily that the cheaters can be cross-checked into oblivion. I don’t see why people would be more likely to cheat if they were transacting in Bitcoin instead of cash.
Cash is pretty anonymous, but also pretty useless for paying people over the internet. Cheques typically leave an audit-friendly paper trail.
I’m not sure I agree. Firstly, I bet that people have laundered plenty of money using online poker, and failed to report taxes on a lot of it, too. (Although obviously there’s a difference in scale between a proposed new replacement currency and poker players’ chips, and Bitcoin’s anonymity makes it much easier.)
Secondly, what makes it much easier to evade taxes by failing to report Bitcoin payments than evade taxes by failing to report cash or check payments? Taxes work because enough companies and individuals pay them voluntarily that the cheaters can be cross-checked into oblivion. I don’t see why people would be more likely to cheat if they were transacting in Bitcoin instead of cash.
Consider also the USG’s attempts to enforce IP laws. Lots of sound and fury, but totally ineffective so far in actually curbing copyright infringement by individuals. And you know a lot of lobbyist money must be going towards trying to get those laws working. If people ever care about using Bitcoin as much as they care about downloading an album quickly and easily, then it seems to me that government is in trouble.
Taxes work because people like me—highly-paid middle-class employees—find them almost impossible to dodge. Everyone else is the fluff on the side—it’s PAYE (pay-as-you-earn, where taxes are withheld from your earnings) employees who are the backbone of government revenue. And, increasingly, sales taxes. In both cases, the pressure point is businesses, of which there are far fewer than there are citizens.
I hadn’t seen that term, so for others who were in my position,
PAYE = Pay as you earn (presumably payroll taxes)
Yes, sorry, clarification added.
Really? OK, I will assume you’re serious and not joking. A check is drawn on a bank or savings and loan or such, and banks, etc, are heavily regulated and audited by government.
As for cash, the U.S. government makes it inconvenient to pay someone or be paid by someone in cash with “Know Your Customer” banking regulations. They try to make it so that the inconvenience and risk increases at least linearly with the amount of cash involved.
Copyright infringement and gambling do not have the potential to seriously reduce governmental revenue. Consequently, the most competent bureaucrats have not been assigned to controlling those things like they have or will be assigned to controlling Bitcoin.
The U.S. response to infringement has been conducted mostly by the legislature and the judical branch. It would be a lot more effective if the most competent parts of the executive branch, e.g., the Secret Service and the Treasury Department, made it a priority.
Disclaimer: I haven’t studied Bitcoin so these comments should be taken as my rationale for not making the effort to study it.
I was serious, but on reflection, I agree—it’s easy to audit checks, since they go through a bank. You may be right about how large a threat to taxation a strong Bitcoin would be.
Linearly? You don’t have to go up all that far on a linear scale before you reach 100% chance that you will be caught and receive the maximum punishment allowed by law!
I agree you cannot make risk linear with dollars. What I tried to say is that they try to make inconvenience linear with dollars, so that one shouldn’t generalize from the fact that one can take a few 1000 out of the bank in cash and put it in again a few months later without anything happening.
Well, even that’s not right, but I do not have time to be more articulate right now.
Cash is pretty anonymous, but also pretty useless for paying people over the internet. Cheques typically leave an audit-friendly paper trail.